Beveridge & Diamond

TCEQ Considers Potential Compliance History and Penalty Policy Rulemaking

Beveridge & Diamond, P.C., April 14, 2006

During two Commission meetings in March, the Texas Commission on Environmental Quality (TCEQ) considered key policy issues associated with its decision to modify the existing compliance history rule and Penalty Policy.  The compliance history rule, set forth at 30 Texas Administrative Code (TAC) Chapter 60, governs TCEQ consideration of a regulated entity’s compliance history in permitting and enforcement matters.  The TCEQ Penalty Policy describes agency policy on computing and assessing administrative penalties in enforcement matters.  The current compliance history rule and Penalty Policy have been a focal point of discussion and debate since the initiation of the agency’s enforcement review process in 2003.  These discussions will undoubtedly continue during the coming months.  However, as a result of the latest public comment received regarding potential changes, the Commissioners have given preliminary direction to agency staff as follows:

Regarding changes to the compliance history rule, the Commissioners indicated that the existing compliance history numerical formula used to classify the performance of regulated entities should be retained and refined rather than substituted with a criteria-based formula.  These refinements are to include developing a new way to measure complexity of a regulated entities operations, changing the way that self-reported violations are used in the formula so that only those self-reported violations included in an issued order or judgment would be considered, expanding consideration of positive elements or good performance factors in the formula, and modifying the definition of  “repeat violator.”  In addition, the Commission stated that regulated entities should have an opportunity, upon request, to review compliance history classification and ratings prior to the agency’s publication of this information.  Automatic notification to “poor performers” would presumably continue.

On the Penalty Policy, there was considerable discussion about whether the Penalty Policy, as revised, should be adopted as a rule, including whether the entire Penalty Policy, or only certain portions of it, should be adopted as a rule.  For now, it appears that at least some aspects relevant to the Penalty Policy may be the subject of rulemaking.  There was also significant discussion regarding the consideration of economic benefit and culpability in the penalty calculation.  The Commissioners did reach agreement that: (i) the way the compliance history component is currently used to calculate administrative penalties should be changed so that either the compliance history classification or individual compliance history components are considered, but not both; (ii) a different method for determining the number of penalty events be explored; (iii) penalty adjustments for good faith efforts to comply should be allowed when some, but not all, of the violations are corrected; and (iv) a small business, on a case-by-case basis, may be afforded different treatment. 

If you have any questions about the proposed compliance history or Penalty Policy changes, please contact Lydia González Gromatzky at, Maddie Kadas at or Laura LaValle at

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Maddie Kadas is a Director of the Firm.  She represents the Firm’s clients on a variety of regulatory and litigation matters, concentrating in air and waste issues.

Laura LaValle is also a Director of the Firm.  Her practice focuses on Clean Air Act matters including permitting, compliance and policy issues.  She also provides counsel on waste matters, including permitting and remediation.

Lydia González Gromatzky, previously chief of legal services for the Texas Commission on Environmental Quality, is Of Counsel with the Firm.  Her environmental law practice focuses on waste and water issues.